Nick & Zak’s Excellent Adventure: How Nick Sleep & Qais Zakaria Built Their Partnership

Nick Sleep and Qais Zakaria founded Nomad Investment Partnership in 2001 as an act of rebellion, applying quality thinking from Zen and the Art of Motorcycle Maintenance to deliver tenfold returns.

Unconventional Origins

• Sleep entered finance after studying geology and working in retail and windsurfing; Zakaria learned caution from his father's bankruptcy (0:00-10:01).
• Mentor Jeremy Hosking at Marathon bought despised assets during the 1997 Asian crisis at one-quarter replacement cost.

Core Principles

• Intentional disconnection ignored daily news and broker calls to focus on long-term signals.
• Destination analysis asked where a business would be in 10-20 years and what obstacles stood in the way (10:02-20:03).

Evolution of Strategy

• Early cigar-butt buys gave way to wonderful businesses after the Stagecoach sale proved costly.
• Scale economies shared became the central model, seen in Costco's 15% markup cap and Amazon's cost reinvestment (20:05-40:09).

Concentrated Bets

• Portfolio narrowed to Amazon, Costco, and Berkshire Hathaway; Amazon later exceeded 70% of Sleep's net worth, prompting a conflicted sale at $1,500 (40:10-41:32).

00:00:00 Nick Sleep & Zach Zakaria: Early Life, Influences, and the Seed of Nomad

00:00:00 - Major Topic: Nick Sleep’s Edinburg roots and the quest for Quality investing

• detailed notes / examples / explanations
• Nick Sleep wanted to stay in Edinburgh and searched for what the city did well. He discovered Edinburgh’s fund management reputation and read an obscure book titled Investment Trust explained to understand investing. This kicked off his intellectual curiosity about the field.
• Sleep landed a trainee investment analyst role at a small Scottish fund company despite a non-traditional path: geology in college, then geography; work history included a department store job, an IT firm, and sponsorship of wind surfing. This demonstrates the theme that formal qualifications aren’t the sole predictor of future success in investing.
• He describes his worldview as valuing originality: "I got comfortable being different from everyone else early on; I was happy being outside the group". This underlines a lifelong tendency to think independently rather than conform to industry norms.
• The 1990s-early 2000s influence: Sleep encountered Zen and the Art of Motorcycle Maintenance: An Inquiry into Values, a book about pursuing Quality in work and life; Sleep framed quality as a transcendent goal—where the deepest satisfaction comes from doing things well, turning even mundane work into a meaningful pursuit. This shapes his idea of what a successful investor should be: an intellectual explorer prioritizing quality over short-term signals.
• Quote (verbatim):

"I like the sense of it being an intellectual investigation."

"I got comfortable being different from everyone else early on. I was happy being outside the group."

"Zen and the Art of Motorcycle Maintenance" provided a model for living and working in a transcendent way; the book extols those who care intensely about the quality of their actions and decisions.

"the real cycle you're working on is a cycle called yourself."

"you really want to do everything with quality as that is where the satisfaction and peace is."

The book’s approach resonates with Sleep’s later emphasis on independent thinking and long-horizon quality investing.

• Sleep’s synthesis of these ideas: quality becomes the core metric for decision-making in investing, not flashy market chatter. The philosophy becomes a lens through which all later decisions—like portfolio construction and ownership duration—will be judged.

00:10:02 - Subtopic: The Nomad Investment Partnership emerges as a laboratory for high-quality investing

• Sleep and his friend Zach Zakaria formed The Nomad Investment Partnership around 2001, framing it as a laboratory to test thinking, behavior, and investment processes under the quality umbrella.
• Sleep wrote eloquent shareholder letters (and partnership letters later) that reflected a high-minded, long-term approach; the letters indicate the project’s identity as much about process as profits.
• The host highlights that the exit from Nomad in 2014 was dramatic: the fund had 14 years of documented, high-quality performance and ultimately distributed returns as Sleep and Zakaria retired from fund management at 45.
• Notable traits attributed to Nick and Zach by observers: complete independence, clear thinking, deep research, and very high concentration in a few ideas; they also cultivated a mystique by flying under the radar and eschewing heavy marketing.
• Quote (verbatim):

"they regarded Nomad as an act of rebellion."

"the rich rewards go to those who resist the lure of instant gratification."

• The narrative pins a long arc: a small Scottish starting point, a move toward London, exposure to Berkshire Hathaway’s ethos via Warren Buffett, and a later emphasis on ownership of fewer, higher-quality ideas rather than frequent trading.

• The host positions this as a precursor to the main book discussion in William Green’s Richer, Wiser, Happier, noting that Chapter 6—Nick & Zach’s Excellent Adventure—lays out the nontrivial path to durable investment success.

"the chapter is called Nick and Zach's Excellent Adventure: a radically unconventional investment partnership reveals that the richest rewards go to those who resist the lure of instant gratification."

00:20:05 Zach Zakaria: Background and the road to Nick Sleep

• Zach Zakaria was born in Iraq in 1969 into a relatively privileged family (father at the Iraqi Central Bank, mother a university lecturer). When he was young, they fled Iraq and sought refuge in the United Kingdom.
• Zach’s early life featured upheaval: his father later started a machinery export business to Iraq but went bankrupt, not due to the main business but due to speculative activity in stocks. Zach later emphasizes a crucial lesson from his father: "my father had made his money on things he understood and lost them on things he didn't understand."
• He studied mathematics at Cambridge, then moved to Hong Kong as an equity analyst. His career path was disrupted when his boss at the Hong Kong firm was crooked and eventually fired, which left Zach unemployed and scrambling for work.
• A crisis moment leads him to a desperate pivot: he takes a sell-side analyst role in Asia at Deutsche Bank—described by Zach as "absolute hell" for four years. However, this period ultimately catalyzed his eventual meeting with Nick Sleep, as it brought him into the orbit of people who were looking for deep, value-oriented opportunities in markets others ignored.
• The broader theme is that opportunity often arises after a loss; Zach’s job loss opened doors to a path that became central to Nomad’s investment culture.

00:30:07 Nick Sleep at Marathon and the Buffett Connection

• Nick Sleep’s career path: after stints at a small Edinburgh fund and Sun Life (a huge firm), Sleep joined Marathon Asset Management in London in 1995. Marathon’s co-founder Jeremy Hosking becomes a key mentor; Sleep describes Hosking as iconic and contrarian about buying what others avoid.
• The Asian Financial Crisis of 1997 becomes a turning point: Sleep and his team scavenge for cheap stocks across Southeast Asia, an approach that yields outsized results as the region recovers. This experience shapes Nomad’s later emphasis on price discipline and long-term quality.
• Zach joins Marathon in 2000 after moving from Deutsche Bank to London; the two begin collaborating, visiting Berkshire Hathaway’s annual meeting in Omaha and soaking in Buffett’s approach to quality investment. The host draws a clear parallel: Buffett’s model of owning durable, high-quality businesses becomes the template for Nomad’s strategy.
• Quote (verbatim):

"Buffett struck him as the embodiment of quality."

• By 2001, Nick receives the green light to start Nomad Investment Partnership, inviting Zach to join as co-manager. The narrative frames this alliance as a deliberate, almost rebellious act—an attempt to challenge the status quo of fund management with a more principled, patient method.

00:32:50 Never Mind the Bollocks: A Contrarian, Focused Beginning

• The partners decide to ignore the bulk of conventional investing information that they deem ephemeral or noisy. They prioritize a simple, clear objective and avoid being distracted by short-term news and marketing pitches from brokers.
• Principle: a tenfold increase in Nomad’s net asset value is the target, but they work backwards from what to ignore (William James on knowing what to overlook).
• Quote (verbatim):

"The art of Being wise is the art of knowing what to overlook."

• They emphasize a practice of intentional disconnection: deep research without constant information inflows from markets or chatter; the goal is to think in peace, undisturbed by popular obsession.
• They analyze businesses with long shelf life: questions they press into the research process include:

- "What is the intended destination for this business in 10 or 20 years?" - "What must management be doing today to raise the probability of arriving at that destination?" - "What could prevent this company from reaching such a favorable destination?"

• The concept of shelf life becomes a filter for what information to trust, favoring inputs with lasting relevance over short-lived news. This is part of their broader framework to avoid information junkies who chase ephemeral signals.

> > > Blockquote: "Information like food has a sell-by date; some information has a long shelf life."

• The partners describe this approach as a "practice of intentional disconnection" and note that it aligns with a goal of focusing on durable value rather than transient hype.

00:40:10 Scale Economies Shared: What constitutes the core of great businesses?

• Exploration into characteristics of firms with unusually long shelf lives leads to a single, powerful framework the partners call Scale Economies Shared (their term for this model).
• They identify Costco as a prime early adopter: Costco’s strategy of low markups (no more than about 15%) and cost-conscious operations creates a flywheel: satisfied customers drive volume, which enables scale discounts, which lowers costs further, enabling lower prices, which again drives more business.
• Key mechanics of Costco’s model:

- Low markup means price discipline and long-run customer loyalty. - The flywheel: more revenue leads to more scale, which reduces costs, which leads to lower prices, which attracts more customers. - The strategy is not about exploiting margins, but about maintaining a longer, durable franchise by sharing savings with customers.

• Over the 18 years of holding Costco (from around 2002 onward), the stock rose from about $30 to around $380 per share, with dividends, illustrating how a durable, customer-centered business model compounds value over long horizons.
• The lead insight: scale economies shared should be the core investment focus; quality, durability, and shareable cost advantages create enduring franchises.
• They extend the Costco logic to other durable players in history (Walmart, Geico, Nebraska Furniture Mart, Henry Ford) to show the universal applicability of this approach.
• Quote (verbatim):

"increase revenues begets scale savings begets lower costs begets lower prices begets increased revenues."

"Costco's readiness to share the benefits of its scale with customers meant that size became an advantage, not a burden."

• They argue that sustainable franchises dodge the trap of mediocrity by keeping profits in check today to preserve the franchise for tomorrow. This is a deliberate counter to short-term performance pressure.
• The discussion then broadens to the founder profile: visionary founders who obsess over the smallest details, customer experience, cost discipline, and long-term investment—yet who remain iconic and independent from market fads.

"Founders who are passionate about the smallest details and the customer experience, who invest for the distant future despite external pressure to report strong numbers."

00:50:00 Beating the Market with Patience: Bezos, Amazon, and the Prime Advantage

• The partners identify Jeff Bezos and Amazon as the Internet-era instantiation of Costco-like scale economies: relentless cost control, patient capital allocation, and reinvestment of cash flow to fuel growth.
• Bezos’s approach is described in vivid detail:

- He saves money and time for customers (e.g., removing unnecessary office expenses such as light bulbs in vending machines to cut costs). - He invests hundreds of millions each year in price reductions and subsidies for growth, accepting low or negative near-term profits for long-term scale. - The market often criticized the lack of immediate profitability, but Sleep and Zakaria recognized the long-run virtuous cycle Bezos sought to build: efficiency improvements and scale economies feeding consumer value, which expands free cash flow and company value over time.

• The moment of insight: Amazon Prime becomes the Amazonian equivalent of Costco’s membership model, creating a durable customer commitment that reinforces the scale flywheel.
• The decision to invest in Amazon begins in 2005 when Amazon’s price was around $30 per share, seen as a strategic opportunity to participate in a durable, long-horizon growth engine.
• Quote (verbatim):

"Bezos was ruthlessly efficient about controlling cost. This is a new story for me." "Bezos unveiled Amazon Prime; Nick recognized instantly this was the Amazonian equivalent of Costco's annual membership fee."

• The discussion notes the importance of a patient, long-term horizon, resisting Wall Street’s demand for immediate profitability, and focusing on real, durable advantages that compound over time.

01:00:00 The Earned Secret: Encyclopedic Knowledge, Slow then Fast, and the Power of Deep Research

• The hosts discuss a broader meta-theme: the value of developing an "earned secret"—a deep understanding that becomes the guiding insight for decades. The idea is that the best ideas emerge from sustained, disciplined study rather than quick, reactive bets.
• The concept is framed via variants of the Buffett/Munger lineages and philosophers such as William James. Sleep and Zacharia emphasize the importance of an encyclopedic base of knowledge built over decades; this allows rapid recognition and confident decisions when the right opportunity arises.
• The host draws a parallel to Leul (Leel) and Buffett’s reading process: the depth of reading accumulates into an almost intuitive ability to identify meaningful, long-horizon opportunities quickly when a relevant signal appears.
• The notion of "slow then fast" is emphasized: build a comprehensive knowledge base first, then leverage it to act decisively when the right opportunity emerges.
• The Costco/Amazon comparison becomes a concrete example of how a deep knowledge base translates into identifying the right existential bets years before others realize their significance.
• They highlight the importance of keeping a disciplined focus on the core model, rather than being pulled into every new trend or instrument.
• Quote (verbatim):

"the encyclopedic base of knowledge you cannot shortcut."

"If you're thinking rationally and thinking about the long term you can subcontract the capital allocation decisions to them."

01:20:00 From cigar butts to durable quality: a turning point

• Early Nomad investments included cigar butts (cheap assets) in various regions like Thailand, the US, and Zimbabwe. The gains from these cheap assets highlighted a pitfall: they don’t scale well as markets recover and valuations normalize.
• The Stagecoach episode illustrates the pivot: a turnaround story where a formerly struggling business produced a temporary 6x gain, but the later realization that the business was not as temporarily mispriced as initially thought led Sleep and Zakaria to rethink the portfolio construction.
• The key insight: focus on owning wonderful businesses with durable competitive advantages and allow the management to allocate capital, rather than trying to time markets or pick hidden assets.
• This shift aligns them with Charlie Munger’s architecture of investing: look for durable businesses with strong economic moats and competent, patient managers who reinvest for long-term gains.
• Quote (verbatim):

"we can subcontract the capital allocation decisions to [great managers]... you don't have to be buying and selling shares."

01:40:00 The Earned Secret in Practice: Amazon, Costco, Berkshire as Core

• The narrative emphasizes three core holdings as the backbone of Nomad’s final concentration: Amazon, Costco, and Berkshire Hathaway. The emphasis is not on diversification for its own sake, but on owning durable businesses with enduring franchises and high-quality management.
• Nick Sleep’s personal exposure to these holdings becomes a source of wealth: by 2014 Nomad had grown to about $3 billion, and by 2018 Amazon alone accounted for more than 70% of Nick’s net worth. Sleep even faced the emotional challenge of selling half of his Amazon stake in a single day in 2014 for about $1,500 per share, describing the sale as a painful moment.
• Zach kept about six favorite stocks from Nomad and maintained a heavy concentration in Amazon for many years (about 70% of his net worth in the stock, by implication).
• The partner’s investment philosophy culminates in a reflective statement: there are very few businesses that invest in the future the way these do; they are not swayed by market trends or fads; they operate with a long-term orientation.
• Quote (verbatim):

"There are very few businesses that are investing in the future the way they are. They don't care about Wall Street. They don't care about Trends. They don't care about fads. They're just doing the right thing long term."

01:50:00 The Retirement, the Legacy, and the Book Recommendation

• In 2014, Nomad Investment Partnership was dissolved after a storied run, turning investor capital into long-term wealth for many of its participants.
• Nick Sleep’s post-Nomad life included a significant portion of his net worth tied to a concentrated trio (Amazon, Costco, Berkshire) and a cautious approach to taking capital out of high-conviction positions when they felt the asset had matured.
• The host notes that Sleep’s open recommendation after Nomad is to read William Green’s Richer, Wiser, Happier, particularly Chapter 6 about Nick & Zach’s Excellent Adventure, as it captures the essence of their partnership and the philosophy behind their success.
• The closing call-to-action invites listeners to explore the full story in Green’s book and to anticipate a future episode focusing on Sleep’s partnership letters.

02:00:00 Resources Mentioned (Bookends and Influences)

• Zen and the Art of Motorcycle Maintenance, Robert Pirsig — a meditation on values and quality, shaping Sleep’s worldview around the idea that the journey and the quality of actions are central to meaningful life and work.
• Investment Trust Explained (obscure book Sleep read to learn investing fundamentals).
• The Nomad Investment Partnership — Sleep and Zakaria’s long-lived, high-conviction vehicle that ultimately achieved substantial compound growth through a concentrated, high-quality approach.
• Richer, Wiser, Happier: How the World's Greatest Investors Win in Markets and Life by William Green — the book referenced as a key guide to Nick Sleep and Zach Zakaria’s partnership; Chapter 6 is specifically discussed.
• Warren Buffett and Berkshire Hathaway — the Buffett/Munger framework and annual meeting as a source of inspiration and practical template for patient, high-quality investing.
• Costco, Stagecoach, Geico, Nebraska Furniture Mart, Walmart, Henry Ford — historical exemplars of durable business models and the underlying principles of enduring value.
• Amazon and Jeff Bezos — the modern embodiment of scale economies and patient, reinvestment-driven growth.
• Value Line — a classic stock analysis tool referenced in the context of building deep, long-term knowledge.
• Jeremy Hosking and Marathon Asset Management — mentorship and the environment that helped shape Sleep’s and Zakaria’s thinking.
• Alex Ogilvy (David Ogilvy) — used as a narrative touchstone about independent thinking, big decisions, and resistance to committees.

02:30:00 Final Reflections and Next Episodes

• The host emphasizes ongoing exploration of Nick Sleep’s partnership letters as a way to deepen understanding of the Nomad model.
• The core narrative underscores patience, quality, and a long-term horizon as the primary drivers of outsized returns in a world full of noise.
• The episode closes by recommending William Green’s book and promising a future discussion focused on the actual letters Sleep and Zakaria wrote to shareholders.

Resources Mentioned

• Zen and the Art of Motorcycle Maintenance by Robert Pirsig
• Investment Trust Explained (obscure book)
• The Nomad Investment Partnership (the fund)
• Richer, Wiser, Happier: How the World's Greatest Investors Win in Markets and Life by William Green
• Warren Buffett / Berkshire Hathaway
• Costco, Stagecoach, Geico, Nebraska Furniture Mart, Walmart, Henry Ford (examples of durable businesses)
• Jeff Bezos / Amazon
• Value Line
• Jeremy Hosking / Marathon Asset Management
• David Ogilvy (Ogilvy & Mather)
• Buffett’s Berkshire Hathaway annual meeting (Omaha)
• Jeff Bezos’s essays and shareholder letters (e.g., 2005 letter)

Notes on Structure for Study

• The core arc moves from a personal quest for quality (Sleep) and a serendipitous partnership (Sleep + Zakaria) to a disciplined, long-horizon investing framework (Nomad) built on a deep, encyclopedic understanding of durable business models and strong managers.
• The central thesis: invest in Scale Economies Shared businesses with durable competitive advantages and long-term management teams; hold them with minimal trading; resist market noise; let the compounding of quality do the work.
• The transition from cigar butts to durable quality is a pivotal moment; it mirrors the broader field’s evolution toward moats, predictable cash flows, and high-conviction holdings.

00:00:00 Summary of Key Concepts (Recap)

• Quality and deliberate patience beat short-term market signals.
• The earned secret arises from decades of reading, research, and consistent pattern recognition.
• Scale Economies Shared is a practical framework for identifying durable business models.
• Intentional disconnection and a shelf-life filter prevent information overload from derailing long-horizon thinking.
• A few concentrated holdings in Amazon, Costco, and Berkshire Hathaway were the bedrock of Nomad’s success.

> > > Blockquote: "There are very few businesses that are investing in the future the way they are; they don't care about Wall Street; they don't care about Trends; they don't care about fads; they're just doing the right thing long term."

> > > Blockquote: "the art of Being wise is the art of knowing what to overlook."

> > > Blockquote: "you don't have to be buying and selling shares."

> > > Blockquote: "the encyclopedic base of knowledge you cannot shortcut."

Topics

• Investment Strategy
• Concentrated Portfolios
• Quality Investing
• Earned Secret
• Scale Economies Shared
• Patience and Temperament
• Historical Case Studies
• Book References